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Mandatory Labelling or Import Ban?: Two-Country Trade with Biotechnology Products

Author

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  • Jinji, Naoto

Abstract

This paper examines trade and welfare effects of biotechnology. While biotechnology lowers production costs, it also lowers perceived quality of products. Without labelling, consumers cannot distinguish between biotechnology and conventional products. In a simple general equilibrium model of two-country trade, it is shown that when a biotechnology product is invented in one country, the importing country may lose from trade under free trade without labelling. The importing country can be better off by requiring labelling for the biotechnology product. If labelling cost is high, however, the importing country may prefer to ban the import of the biotechnology product.

Suggested Citation

  • Jinji, Naoto, 2003. "Mandatory Labelling or Import Ban?: Two-Country Trade with Biotechnology Products," Discussion Papers 2003-03, Graduate School of Economics, Hitotsubashi University.
  • Handle: RePEc:hit:econdp:2003-03 Note: This version: February 12, 2003
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    File URL: http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/16991/1/070econDP03-03.pdf
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    References listed on IDEAS

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    1. Joseph P. Newhouse, 1992. "Medical Care Costs: How Much Welfare Loss?," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 3-21, Summer.
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    Cited by:

    1. Peter E. Robertson, 2007. "Global Resources and Eco-labels: a Neutrality Result," Review of International Economics, Wiley Blackwell, vol. 15(4), pages 735-743, September.

    More about this item

    Keywords

    biotechnology; genetically modified organisms; mandatory labelling; import ban; credence goods;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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